All cells store fatty acids in neutral lipids (triacylglycerols[TAG] & cholesterol esters) in discrete intracellular lipid storage droplets. In the general cell population, very small droplets transiently sequester fatty acids which are used for membrane biosynthesis and as a source of energy. In adipocytes, which store the main bodily energy reserves, fatty acids are mobilized from very large, TAG-rich, droplets and exported to other tissues. In steroidogenic cells, the droplets contain primarily cholesteryl esters, precursors for steroid hormone synthesis. Our research focuses on the surface composition of droplets and the mechanisms by which lipids are both deposited and hydrolyzed. We find that droplet surfaces are coated by related proteins, the perilipins and adipocyte differentiation-related protein (ADRP). Despite its name, ADRP is expressed ubiquitously and occurs on the surface of droplets in nearly all cells examined. However, the three perilipin isoforms are expressed primarily in adipocytes and steroidogenic cells. These cell types are unique in that they use a cAMP/protein kinase A (PKA)-mediated process to hydrolyze their stored lipids. Since perilipins are polyphosphorylated by PKA in concert with the lipolytic reaction, we hypothesize that these proteins participate actively in lipid breakdown. Our data indicate that two PKA-mediated processes combine to promote lipid hydrolysis in adipocytes. First, hormone-sensitive lipase (HSL), the rate-limiting enzyme of lipolysis, rapidly translocates from the cytosol to the lipid droplet when the enzyme is phosphorylated by PKA. Second, PKA phosphorylation of perilipins leads to a dramatic disruption and thinning of the otherwise uniform perilipin envelope that surrounds the droplets, thus providing HSL access to the core lipids within the droplets. Further, the cytokine TNF-alpha also stimulates lipolysis, not by activating PKA but by terminating expression of the perilipin gene. As the perilipin disappears HSL migrates to the periphery of the droplet, but does not tightly associate with the droplet surface as does PKA-phosphorylated HSL. Finally, when expressed ectopically in various fibroblastic cell lines, perilipin A localizes to lipid droplets and increases their TAG content. This increase is not due to altered lipogenesis but to a dramatic reduction in lipid hydrolysis. These findings indicate that non-PKA phosphorylated perilipins shield neutral lipids within storage droplets from lipases, and that upon phosphorylation by PKA, the barrier function of perilipins is attenuated, providing access of PKA-phosphorylated HSL to the core neutral lipid within droplets. Given the critical role of adipose neutral lipid reserves in times of need, it is not surprising that adipose cells evolved this sophisticated dual control system for parsimoniously meting out its supply of fatty acids.